“She was poor but she was honest,
Victim of the Squire’s game,
First he loved her then he left her,
Ain’t it all a bleedin’ shame?”
Just like the anonymous poor girl in the above Victorian Music Hall song, it’s those who can afford it the least that usually end up paying the most.
They say money is the root of all evil. Well I am not too sure about that but money (or the lack of) certainly does do strange things to people.
Everybody dreams of winning the Lottery and being able to walk into your job the next day and politely (or not, depending on your relationship with your employers) being able to tell your employer what to do with it. It seems that with either too much or too little, the end effect is the same and that is, of course, trouble.
You could recant an almost endless list of platitudes about money and the common thread would be the pursuit (and absence) of happiness.
In this article my main concern is the over arching effect that the lack of money has on most people. Now the obvious initial reaction would be that it is fairly obvious what a lack of money does. It restricts what you do at the weekend, how much money you have to spend on clothes, eating out etc or does it?
It seems that we are a generation that is being consumed by debt and by and large we don’t seem to appear to be troubled too much by it. The downside of all of this is that in the United Kingdom we see the Government release an ever increasing quarterly number in the applications to submit to the Bankruptcy Court and in the United States we see a government that is presiding over a National Debt that is the largest ever seen since records began.
With such apparent Public indifference to the side effects of borrowing to excess; is it any worry that this seems to be increasing rather than decreasing? Yet if we are not careful, we are sitting on a financial time bomb that is programmed to explode in our faces in the not too distant future.
You see being consumed by debt does strange things to people. They say that if you owe the bank £30,000 and they press you to repay, it is your problem, but, that if you owe the bank (or a collection of banks) £300.000 it is their problem. This is by and large down to what degree of “Russian roulette” (as they call it in financial circles) you choose to play with.
The newspaper columns are regularly filled with stories of over stressed individuals who have borrowed too much on their credit cards, can’t repay and have then gone and committed suicide purely as an adverse reaction to the intolerable stress levels that they have apparently found themselves in. Yet at the same time you see a daily procession of individuals cheerfully emerging from the Bankruptcy Courts having declared themselves bankrupt or a degree of bankruptcy that has enabled them to head straight away to the nearest restaurant to celebrate!
Most Financial Institutions when pressed with the unenviable role of calling in debts react in a similar fashion and that is to start to pile on a list of never ending bank charges or financial fees to raise the eventual amount of debt to almost unrecognisable levels. It is understandable that to the average man in the street that when faced with an ever increasing and never ending mountain of debt that the unthinkable in terms of suicide becomes more appealing. After all quite often when the answer to an initial plea of “I can’t afford to repay” is replied to in terms “never mind, have some more and we will change the interest rate, make it slightly cheaper but extend the term” thereby potentially making it doubly expensive but the poor recipient of this largesse is so relieved and grateful that they fail to check this fact in the small print.
Quite frankly, the Banks get what they deserve in the end of the day and all of this hand wringing routine of “we will have to pass these costs onto our other customers thereby making their accounts more expensive” is complete hogwash. The Banks are experts in shovelling money round the system and you can bet your bottom dollar that their eyes light up with glee when they close the front door and open the back door and via a discrete (and sometimes not so discrete) third party decide to play “fast and loose” in the euphemistically described “sub prime” sector. Here they revel in the fact that they can by and large charge whatever they like in rates and damn all others because they know that the poor and unsuspecting borrowers have nowhere else to go.
I once had lunch with a Financial Advisor who gleefully admitted that it was “Sub-prime” lending he was looking to develop and that he could close these sorts of deals all day, every day. He was not one tiny bit interested in the conventional market of standardised borrowing. “No way,” He declared, “it’s only when people get themselves into trouble can we start to make some real money”.
It is one of the greatest paradoxes of modern day society that it is more expensive for those who cannot afford it in the first place to borrow than it is for those who can. The trouble is that the Banks know it; they know who need the money most and they also know how to make the most profit in between.
However this kind of reckless money lending and loan sharking cannot go on for ever. The day will come when if they are not too careful, the mountain of debt will become just a little too large to be dealt with by moving it around slightly.
Steve Morgan is one of the principal advisors to Personal Bankruptcy, http://www.personalbankruptcy.name and it’s associate sister web services, Stress Relief http://www.stressrelief.ws and Personal Finance and Loans Net http://www.personalfinanceandloans.net.